Per Christine Harper at Bloomberg this morning:

Wall Street’s five biggest firms are paying a record $39 billion in bonuses for 2007, a year when three of the companies suffered the worst quarterly losses in their history and shareholders lost more than $80 billion.

Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. together doled out $65.6 billion in compensation and benefits last year to their 186,000 employees.  Year-end bonuses usually account for 60 percent of the total, meaning bonuses exceeded the $36 billion distributed in 2006 when the industry reported all-time high profits.

The report reminded Blawgletter of the Rule Against Making Too Much Money. 

Did you not know that the Rule exists?  Actually it doesn’t — at least not as a rule per se.  As the pirate Captain Barbossa said about the Code of the Order of the Brethren, "the code is more what you’d call ‘guidelines’ than actual rules."

Pocketing humungous profits in a time of cascading investor losses does exacerbate the investors’ pain.  Need we add — also the likelihood that they’ll pursue a lawsuit to seek recompense from the Wall Streeters Who Made Too Much Money?

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Update:  See Blawgletter’s Face of Red.

The WSJ Law Blog reports this afternoon a $280 million verdict in a securities class action against the Apollo Group, which owns the near-ubiquitous University of Phoenix.  The plaintiffs charged Apollo with suppressing a Department of Education report that criticized Phoenix’s, er, aggressive student-recruiting techniques, which involve paying recruiters for each student who enrolled.

The centimillion dollar verdict didn’t rouse Blawgletter’s curiosity enough to post about it.  But then we read the comments to the Law Blog post.  And they included one sufficiently hateful that it deserves a look.  It says:

The time [two days] the jury took to find in favor of the plaintiff illustrates why we need to abolish the jury system.  The jury essentially decided to give away millions of the defendant’s dollars discussed the matter for a mere two days.  The jury in this case is obviously ignorant about the drag on our economy by these kinds of suits, and obviously not instructed that a finding for the plaintiff would serve only to damage the economy.  They need to be told that or they are no better than a barrel of monkeys.  This is a perfect example of a jury being too stupid to do the right thing.  Exhibit one in our effort to abolish jury trials.

Blawgletter hardly knows where to begin.  Two days of deliberations don’t sound to us like the jurors suffered from stupidity or even that they rushed to judgment.  The time suggests instead that the evidence left them with little that the defendants did, apurpose, defraud investors.

Second, the jury didn’t decide to "give away" money.  It concluded that Apollo cheated investors and therefore should compensate them for their real losses.

Third, securities fraud lawsuits aim not only to right the wrongs to individual securities purchasers but also to enhance the honesty of markets and deter future wrongdoing.  Increasing trust doesn’t "damage the economy."  Betraying it does.

Finally, we suspect that, if Tort Reform should find himself the victim of a false or unjust charge, he will thank his lucky stars that he has the constitutional right to have a jury of peers decide his fate.  Or will he stick to his principles and put his freedom and fortune in the hands of a single government employee?

Tort Reform’s vitriol is a refreshing — and possibly satirical — change from cleverer efforts to reduce the right to jury trial from an essential democratic freedom to a dead letter.  You won’t catch the likes of the American Tort Reform Association or the U.S. Chamber of Commerce admitting, as Tort Reform does, that they want to "abolish jury trials."  And yet one gets the strong impression that really they do. 

Thank you, Tort Reform, for fessing up.

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A little while ago, Blawgletter asked Should Class Action Plaintiffs Designate "Trial Only" Counsel?  Today we got an answer.

Steve Foster commented:

Well, I’m a little late in starting a discourse, but here goes:

Disclosure:  I’m a plaintiff’s lawyer. 

It seems to me that the number one job of a defense lawyer is to manage risk for his client. 

Therefore, if bringing in "trial only" counsel increases the risk of an unfavorable outcome for the defendant, it is desirable and in the plaintiffs’ best interests (so long as the cost for "trial only" counsel is less than their benefit to the class).

If the original class counsel cannot maximize the value of a case because of a perceived lack of trial ability, then associating with "trial only" is not only a desirable tactic, it’s probably ethically required by the class counsel’s fiduciary duty to the class.

Wow!  Steve nails the very issue at which we tried to get — and at which the defense lawyers who suggested "trial only" counsel for class actions hinted:  Managing risk (defense concern) v. increasing it (plaintiffs’ desire).

At least after a beer or three, most class action plaintiffs lawyers will admit that they don’t try a great many cases and that once they beat a motion to dismiss or motion for summary judgment the defendants prove willing, and possibly anxious, to settle. 

But wouldn’t designating a current-day Clarence Darrow, who does try (and win!) a lot of cases, as trial only counsel ratchet up the pressure on the risk-managing defense lawyer and his risk-averse client?  Steve says — and we agree — absolutely!

But Steve also points out that the class ought not overpay for the commitment to try the case.  What’s the right amount?  The defense counsel whose observations started this discussion suggested that designating a formidable trial lawyer as trial only counsel would increase the pretrial settlement value of a case by 10 percent.  That sounds reasonable to us.

We’ll leave to the future questions about whether courts should appoint as lead counsel lawyers or law firms that’ve never actually tried a class action case — a likely majority.  Suffice for now to say that, on average, the mere act of appointing — or retaining — a genuine trial lawyer in a class action makes the case more valuable and benefits the class without increasing the cost of representation to the class members.

Thank you, Steve, for weighing in.

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The Supreme Court today ruled in favor of securities fraud defendants in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 06-43 (U.S. Jan. 15, 2008).  See the opinion here or here and the SCOTUSBlog report here. 

Justice Kennedy wrote the 5-3 majority opinion, in which Chief Justice Roberts and Justices Scalia, Thomas, and Alito joined.  Justices Ginsburg and Souter signed onto the dissent by Justice Stevens.  Justice Breyer, having recused himself, didn’t participate.  See Counting Votes in Stoneridge.

The decision appears to turn on the reliance element — the very ground that the Solicitor General urged the Court to adopt.  See Solicitor General Splits Baby in Stoneridge, May Affect Enron Case.

The defendants wanted a more sweeping opinion, one that would’ve absolved mere "participants" in a "deceptive act" or scheme from any liability under Rule 10b-5 so long as they didn’t utter a misrepresentation or half-truth.  The majority said on this point:

The Court of Appeals concluded petitioner had not alleged that respondents engaged in a deceptive act within the reach of the section 10(b) private right of action, noting that only misstatements, omisisons by one who has a duty to disclose, and manipulative trading practices . . . are deceptive within the meaning of the rule. . . .  If this conclusion were read to suggest there must be a specific oral or written statement before there could be liability under section 10(b) or Rule 10b-5, it would be erroneous.

Stoneridge, slip op. at 7.

At its conference on January 18, 2008, the Court will again take up a petition to review the Stoneridgey decision in Regents of the Univ. of Calif. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372 (5th Cir. 2007), which turned on the "deceptive act" element instead of reliance.  See Blawgletter post here.  Consideration of Regents, No. 06-1341, at a conference on June 21, 2007, produced no action. 

We predict a different result this time:  vacation of Regents and a remand for proceedings in light of Stoneridge.

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An hourly client recently surprised Blawgletter. After a strategy meeting that included several other people, an in-house lawyer remarked about our focus on the “economics” of the lawsuit — things like the cost of defense, the goals of the plaintiff, the advantages and disadvantages of joining issue at once, and the crucial importance of assessing the merits at the outset. He said he’d never heard a defense lawyer talk that way before.

Which, as we said, surprised us. It made us wonder what defense lawyers normally do talk about. Do they say things like “there, there. You didn’t do anything wrong. I’ll move heaven and earth to make the plaintiff wish he’d never filed suit”?

Do they even talk about balancing costs against benefits?

Or do they focus on making the client angry at the injustice of it all? On persuading them to scorch earth until the plaintiff relents?

Really. We’d like to know.

Thanks largely to the leadership of Alistair Dawson, the Litigation Section of the State Bar of Texas last year commenced online publication of News for the Bar.  The latest quarterly issue includes two items that Blawgletter finds entrancing — the first mainly because we wrote it and the second because in it a federal judge pithily explains why litigation has in the last 25 years come to cost so much and take so long while producing no better results.

Our article — "Blawging as Marketing" — starts on page four of the Winter 2007-08 edition. It explains why blawging appeals to us more than other kinds of marketing:

I don’t have the schmoozing gene. I prefer interacting with people I already know and like.  So the life of meeting strangers at receptions, open houses, banquets, awards ceremonies, early breakfasts, late lunches, CLE and sporting events, poetry readings, shotgun weddings, and All About Eve screenings holds less than little appeal to me. I do not excel at that kind of marketing because I do not enjoy it.

But I do love to write and to get people laughing. Marketing that lets me do things I already adore makes the most sense for me.

In the second piece, which commences on page 17, Gretchen Sween interviews U.S. District Judge Royal Furgeson of the Western District of Texas, El Paso Division. Judge Furgeson laments the transmogrification of civil litigation into a "paper war".  And he pulls no punches when identifying the transmogrifier — the U.S. Supreme Court. In three lines of cases, he explains through the interviewer, the Court invited litigants to deluge trial courts with "enormous briefs" and "voluminous attachments that . . . reduce the whole process to a trial by paper."

The decisions that kindled the paper wars will be familiar to federal litigators: Celotex Corp. v. Catrett, 477 U.S. 317 (1986), encouraged motions for summary judgment; Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), opened the door for multitudinous challenges to experts and their opinions; and Bell Atlantic Co. v. Twombly, 127 S. Ct. 1955 (2007), invited motions to test the "plausibility" of pleadings.

We confess that we hadn’t realized the profound effect of the procedural hurdles that the triple threat of Celotex, Daubert, and Twombly put in the path of trial on the merits, and yet now it seems blazingly obvious. 

Thank you, Judge Furgeson, for opening our eyes.

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Accounting

According to the title of an article in the February 2008 edition of Litigation News Online, In-House Counsel Are Keeping Closer Tabs on Outside Lawyers.  In the article, Associate Editor Kristine L. Roberts reports on a survey by the Association of Corporate Counsel:

In-house attorneys are imposing more requirements on outside counsel.  For example, three-fourths of the companies surveyed insist that their law firms provide budges for at least some matters.  Other common requirements include periodic bills, specific billing formats, discounted rates, regular status reports, and involvement in staffing decisions.  Companies are increasingly using technology to track work, such as electronic billing systems that compare bills with budgets. Many law departmt have also used convergence (i.e., reducing the number of outside firms with which they regularly work) to control legal costs.

Blawgletter can think of few things less joyous than fly-specking invoices, second-guessing staffing, and comparing billings against budgets.  All that strikes us as so . . . negative.  Unproductive.  Even adversarial.

Our solution?  Don’t pay by the hour.  Pay for results.  As you do in contingent fee arrangements:  no fee unless your lawyer wins.  Joy!

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Cindysheehan
Cindy Sheehan at the White House in 2006.

The D.C. Circuit today granted presidential scourge Cindy Sheehan a new trial on charges that she violated a National Park Service regulation in September 2005 by protesting on a White House sidewalk.  As the court said:

We reverse and remand for a new trial . . . because appellant [Sheehan] was convicted of a crime that does not exist and prevented form offering a viable defense.  There is no strict liability under [the National Park Service regulation].  Yet, the Magistrate Judge allowed the Government to prosecute the case against Ms. Sheehan on the erroneous premise that the disputed regulations imposed strict liability for her alleged expressive activity, and sustained the prosecutor’s objections when appellant sought to advance a defense based on her knowledge and intent.  As a result, appellant’s conviction is based on errors of law that eliminated the prosecutor’s burden to prove mens rea and barred the appellant from presenting a defense on that issue.  We are therefore obliged to reverse and remand for a new trial.

United States v. Sheehan, No. 07-3002, slip op. at 3 (D.C. Cir. Jan. 11, 2008).  On remand, the court instructed, Ms. Sheehan can offer evidence that she didn’t know the protest permit didn’t extend to the White House sidewalk or that she needed one at all.

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Searchenginers
Search engines can help you find email addresses.

People such as you and I — we who spend many happy hours preparing to try and occasionally trying business lawsuits — often find ourselves needing, of all things, the email addresses of other people.

Think about it.  All but antediluvian lawyers, and pre-antediluvian clients, use email these days.  Witnesses send and receive it.  A great many probably overemploy it, preferring the cool distance of typing to the warmth of human interaction, the spontaneity of pounding out a message and hitting "send" to the less impulsive process of giving due thought to a writing that will likely outlive the author and may haunt him in the afterlife. 

In the context of commercial lawsuits, email inescapably is an important source of evidence and a near-essential means of communication.

So, you ask, what’s the big deal about knowing email addresses?  Why do you need them?

Thank you for inquiring.  Blawgletter can think of at least three reasons:

  1. The Internet, though otherwise brilliant, isn’t smart enough to deliver an email to an email address that doesn’t exist.  harry_potter@hogwarts.edu will not work if Hogwarts uses a different convention for individuals’ names (the "harry_potter" part) or for the domain name (the "hogwarts.edu" bit).  More on that below.
  2. Knowing the correct email address of a witness may help you search electronic files for relevant documents.  With so much discovery taking the form of electronically stored information, searching through millions of pages usually involves using key words.  An email address could be an important key word for these searches, not only when you look through the other side’s documents but also when you review your own client’s.  But, again, you need the address exactly right before it’ll do you much good.
  3. The email address may enable you to locate and learn about witnesses.  An increasing number of people nowadays have an electronic footprint.  They blog; they post personal data on MySpace, LinkedIn, FaceBook, and the other social and networking sites; an organization publishes PowerPoint presentations they gave; newspaper, newsletter, and magazine articles mention them; property, court, and appraisal records name them; and on and on.  Sometimes the email address will return the best search results; but harry_potter@hogwarts.edu , harry_potter, or even @hogwarts.edu plus "Harry Potter" are far more likely to yield the Harry Potter you want than Googling "Harry Potter".

You can probably imagine many more reasons to get the right email addresses of clients, lawyers, witnesses, and others.

But how do you actually obtain them?  Before we tell you, please recall that you swore an oath to use your knowledge and skills for good and not evil.

Very well then.  To get accurate email addresses for a specific individual, do this:

  1. Go to your favorite search engine.  Most people like Google.  Yahoo!, Dogpile, the search functions on web browsers such as Explorer, Safari, and Firefox, and other engines will work fine too.
  2. If you know where the person works or worked, search for for the employer’s name, go to its principal Internet site, and note the site’s domain name.  Here, hogwarts.edu.
  3. Next, search for the domain name — in our example, hogwarts.edu.  You may want to put the "@" at the front just in case the search engine recognizes that as a distinct character (something Google seems not to do).
  4. The search will probably return lots of responsive references, but you should look for ones that — Voilà! — include email addresses that use the domain name.  Note which protocol the email addresses use:  First name only (harry@hogwarts.edu)?  Just last name (potter@hogwarts.edu)?  First initial plus last name (hpotter@hogwarts.edu)?  First name plus last name  (harry.potter@hogwarts.edu, harry_potter@hogwarts.edu, or harry-potter@hogwarts.edu)?  Formal names (harold_potter@hogwarts.edu)?  Or some other variation?
  5. Now search for the domain name plus the person’s name.  If that doesn’t work, do a search for different possible variations of the actual email address using the protocol you discovered in step 4.  Should you learn from the search that Hogwarts assigned ron.weasley@hogwarts.edu to Harry Potter’s friend Ron Weasley, you might start by searching for harry.potter@hogwarts.edu.
  6. Should you still not have the email address, the final thing you can do is start sending emails to the email addresses that seem most likely in light of the protocol.  Again resorting to our example, we’d imagine that harry.potter@hogwarts.edu could make a good start.  If the email bounces back, read the error message in the bounceback alert.  If it says no such address exists, that likely means that you need to try another address, still using the protocol that Hogwarts typically uses.

These methods won’t always succeed of course.  Some organizations have firewalls and filters, for example, that don’t allow emails from addresses they don’t recognize as safe.  But we bet you’ll get decent results more often than not.

Happy hunting!

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Khoek Ssklaver
New SG partners in Los Angeles, Kathy Hoek and Steve Sklaver.

Blawgletter wishes congratulations to Kathryn P. Hoek and Steven G. Sklaver on their joining the ranks of partners in our firm, Susman Godfrey L.L.P.  Both work principally in the Los Angeles office.

Ms. Hoek graduated from Yale Law School in 2001 and joined the firm in 2005 after clerking for U.S. District Judge Lee Rosenthal in Houston.

Northwestern University School of Law awarded Mr. Sklaver his J.D. in 1998.  He clerked for U.S. Circuit Judge David M. Ebel in Denver and started at SG in 2005.

SG’s partnership track generally runs four years with the firm and at least five years out of law school.  As Ms. Hoek’s and Mr. Sklaver’s less than three years at SG demonstrate, there are exceptions. 

We also have offices in Dallas, Houston, New York, and Seattle. 

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